Zim currency woes to hit Edgars product range

Harare – According to Edcon’s Zimbabwe-based clothing retailer Edgars Stores Limited, prevailing foreign currency shortages in the country will impact its product range.

In a statement accompanying its results for the half-year ended July 9 2017, Edgars chairperson Thembinkosi Sibanda said prevailing currency shortages will affect its product range, “particularly for the fourth quarter”.

In the first half, the group’s manufacturing unit made a loss of $0.3m, which Sibanda said was the result of fabric outages caused by the shortage of foreign currency. The division is actively seeking to secure export orders so that it can generate its own forex requirements.

“We will pursue all options to obtain key imported products for our customers and inputs for the factory while actively implementing import substitutions where feasible.

“The biggest obstacle to import substitution is limited allocation of foreign currency to local suppliers for fabric and trim imports,” said Sibanda, adding that this should be of national concern.

“Given the gravity and intensity of the unfolding cash shortages and foreign currency scarcity, management is working tirelessly to avoid an inadequately stocked fourth quarter,” he added.

Importers of finished products such as retailers are not on the Reserve Bank of Zimbabwe’s top priority list, making it difficult for retailers to access foreign currency.

In the second half of 2016, the RBZ instituted a Foreign Exchange Priority List, meant to promote efficient utilisation of foreign exchange and reorientate import demand towards productive uses.

The priority list is broken down into four sections: priority one, two, three and four. Retailers probably fall under priority list number four which talks of importation of trinkets, low local content consumer goods and/or goods readily available in Zimbabwe including non-commercial vehicles, maheu (traditional African brew), bottled water, tomatoes and vegetables.

Meanwhile, revenue of $24.7m for the half-year increased by 7% from the same period last year, while the group gross profit margin of 43% dropped by 1% from the same period last year.

The group’s profit before tax for the six months was $0.9m (2016: $0.3m loss).

Despite a tight operating environment where disposable incomes are eroded, Edgars management is not folding hands.

“We will continue to improve store environments. We have recently completed the refurbishment of Edgars Stanley House in the Harare CBD, and the conversion of Edgars Rusape to a Jet store is in progress.

“Our microfinance business, Club Plus (Private) Limited, has commenced trading albeit with caution. The business will focus on short-term consumer loans.”

Sibanda added: “The Enterprise Resource Planning (ERP) solution has enhanced controls over credit policies. This, together with improved debt collection and policy changes in credit management has resulted in savings of $1.5m on last year. We anticipate savings of at least half this amount in the second half of the year.”

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